Is More Globalization or Less Better for Us All?
|January 19, 2014||Posted by Staff under Editorials|
This 2014 excerpt of EUROPP (European Politics and Policy) of the London School of Economics is by Jason Sorens of Dartmouth College and is based on an earlier blog post at Pileus.
Suppose I outsource some of my domestic production to a Bangladeshi subcontractor whose factory is a fire hazard. Is this any different from my importing Bangladeshi workers and putting them to work directly at home under hazardous conditions? From an economic standpoint, the answer is no. From an ethical standpoint, we may split some hairs, but the answer is also no to a first order of approximation. Why should trade allow me to do something that domestic regulations explicitly forbid?
However, Tufts researcher Dan Drezner has found no tendency for globalisation to undermine labour and environmental standards in developing countries.
Does democracy enact a society’s “values”? Arrow’s Impossibility Theorem tells us that it is impossible to aggregate individual preferences into social preferences in a fair and consistent way. Societies don’t have values. Regulations are determined either by the machinations of well-connected interest groups or by the preferences of powerful bureaucrats. Social control of regulations is impossible, even in democracies. The most we can hope for is something will “shuffle the deck” so that today’s insiders don’t remain insiders forever.
Developed countries spend hundreds of billions of dollars a year on agricultural subsidies, tariffs, and price supports, dwarfing what they spend on aid to poor countries. U.S. cotton subsidies alone cost Burkina Faso 1 per cent of its GDP, Mali 1.7 per cent of its GDP, and Benin 1.4 per cent of its GDP. These countries are among the poorest in the world.
Does footloose capital raise the relative bargaining power of capitalists against workers? Removing barriers to the free flow of workers can help solve this problem: let employers compete more intensely for workers. Beyond “free” trade is “free” migration; academics should do more to promote the benefits of open migration to all.
The European Union’s economic problems have come not so much from harmonizing too much (despite the occasional ridiculous overreach in this department) but from a poorly designed currency union. Overall, the single market has greatly benefitted Europe’s people.
Academics should not quail from the responsibility of communicating the advantages of open markets, even when openness is unpopular. Failure to develop can be solved with more globalization, not less.
Ed. Notes: Since so much of the developed gets copied, the richer socieites could also provide a better example of economic justice: geonomize. Replace taxes with dues and replace subsidies with dividends to all citizens. Then all the world could harmonize.